Among the important factors affecting economic growth are, first, the work skills of the population and, second, the attitudes of the population. The attitudes of the work force are shaped by religious, social, cultural, and political traditions which for the most part are transmitted by the process of nurture, informal education as well as formal training. Among the basic attitudes that affect growth are those that determine degree of adherence to traditional occupations and procedures (9, pp. 108-109). Such attitudinal changes will usually influence the degree of labor mobility, the extent of participation by women in the work force (27), and the age at which people normally enter the work force. In addition, they will affect the willingness of people within a given occupation to accept new techniques, equipment, or new organizational forms. In view of these considerations we visualize an economic quality replacement effect in the sense that those who enter the economically active population have a higher productive capacity than those who leave, and hence they increase the average quality of the labor force.
The extent of quality improvement depends, in part, on the rate of population growth. To see the nature of the possibilities involved, consider some examples based on the following assumptions:
1. Education of a formal or informal nature takes place prior to entry into the labor force.
2. Education expenditures are assumed to be consumption expenditures by the parents of those being educated.
3. There are constant economic returns to education with respect to numbers of people educated.
4. The years of education per person are an independent variable.
5. The mean annual income of those with more education is greater on the average than those with less.*
Figure 2 illustrates what can happen to income per worker under sets of alternative assumptions that emphasize the differences between stationary versus growing populations. In cases I and II we have stationary populations in which 2 percent enter the work force each year and 2 percent leave. Those who enter are assumed to have twice as many years of education and three times the associated income levels as those who leave. In the third case 2 percent exit the work force every year and 5 percent enter every year. Note, for example, that at the end of 25 years the per worker income of the stationary population is $150 (assuming an initial income in year zero of $100) compared to $176 for the case in which the population increases 3
:|:See Appendix Table A for some sample ratios for a number of developing countries. The assumptions arc admittedly extreme since they assume that the entire income differential is a consequence of education. However, the nature of the assumption does not invalidate the main point which is to examine the consequences of the entrants to the work force having different productive capacities than those who leave.